Goldman Sachs just did.
In a revolutionary move, the CEO has announced that from July they will no longer take companies public unless they have at female board member. Their reason? Because businesses with diverse boards perform ‘significantly better’ than those without, and this is the ‘right advice’ for the market, clients and stakeholders. Simple.
“I think from a governance perspective, diversity on boards is a very, very important issue, and we’ve been very, very focused on it” said David Soloman, CEO, Goldman Sach at a CNBC interview. “…we might miss some business, but in the long run, this I think is the best advice for companies that want to drive premium returns for their shareholders over time”.
This won’t necessarily be a popular decision but how beautifully bold.
Now, in the interests of being transparent, it’s only fair to clarify the headlines that suggest that those lacking in diversity will be left to knock on the doors of Morgan Stanley and JPMorgan, are not strictly true. IPO clients won’t just be turned away, instead they will be offered support to find female board members. Alarms bells will no doubt be ringing in the minds of critics who are concerned that skills and experience are being replaced by gender and race when it comes to recruitment and selection priorities. This is a valid concern.
Like Goldman Sachs who have opted for a long-term strategy, organisations (no matter what sector or size) must adopt a similar approach when it comes to their diversity and inclusion agenda. One or two women on the board might tick a box, but it’s unlikely to address fundamental barriers engrained in company culture, reinforced by out-dated policies and left unchallenged by the lack of training at all (and I mean all) levels of the organisation.